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Weekly Update Volume 41, Issue 28

10/03/2011

LITIGATION

AIR, PREEMPTION:

The Ninth Circuit reversed in part a lower court decision upholding a "Clean Truck Program" adopted by a California port designed in part to reduce emissions related to port operations, including emissions from trucks. The concession agreements implementing the plan set forth a number of provisions covering, among other things, employee drivers, off-street parking, maintenance, placards, and financial capability. A trucking association argued that the Federal Aviation Administration Authorization Act (FAAA Act) preempted these provisions, but the lower court rejected its claims. The association appealed. The Ninth Circuit affirmed the lower court's holdings that the financial capability, maintenance, off-street parking, and placard provisions are not preempted by the FAAA Act. But it reversed the lower court's conclusion that the employee-driver provision is saved from preemption by the market participant doctrine. The employee-driver provision requires concessionaires to gradually transition to using 100% employee drivers in lieu of independent owner-operators over the next five years. Because this provision seeks to impact third-party behavior unrelated to the performance of the concessionaire's obligations to the port, it is "tantamount to regulation" and does not fall under the market participant exception. American Trucking Ass'ns v. City of Los Angeles, No. 10-56465, 41 ELR 20301 (9th Cir. Sept. 26, 2011).

NUCLEAR WASTE, BREACH OF CONTRACT:

The Federal Circuit affirmed in part and reversed in part a lower court decision granting the buyer and seller of an energy company damages for the U.S. government's ongoing breach of its contractual obligation to collect and dispose of spent nuclear fuel (SNF) generated at a nuclear plant in Plymouth, Massachusetts. The seller sold the plant for $80 million, and the buyer agreed to accept decommissioning responsibilities for $428 million. The lower court reasoned that due to the ongoing breach, the government had directly caused the seller to pay a larger sum in order to relieve itself of its decommissioning responsibilities. It therefore awarded the seller $40 million in damages, which represented the portion of the decommissioning fund corresponding to the projected post-decommissioning SNF-related costs that would be attributable to the government's continuing breach. But a sale of assets by a non-breaching party does not alter the settled common law principle that when the breaching party has not repudiated the contract and is still expected to perform, damages are not recoverable until they are incurred as a result of the breach. The court therefore reversed the lower court's award of damages to the seller. But the court affirmed the lower court's award of $4 million in mitigation damages to the buyer. A non-breaching party contracting with the government has a right to recover indirect overhead costs, but not financing costs, associated with mitigation activities. Boston Edison Co. v. United States, Nos. 2010-5136, -5137, 41 ELR 20303 (Fed. Cir. Sept. 28, 2011).

HAZARDOUS & SOLID WASTE, RCRA, CERCLA:

A district court held that the owner of PCB-contaminated property is not entitled to injunctive relief under RCRA compelling the former owner to either pay for future cleanup costs at the property or take over remediation in its entirety. Injunctive relief is not available when abatement of the contamination has not yet begun. Because no remediation has occurred at the site, the current owner is not entitled to the relief it requests. The current owner also filed a CERCLA claim against the former owner and sought summary judgment as to the former owner's status as an operator at the property at the time of the PCB discharge, as well as its liability for response costs. But the evidence demonstrates that there are issues of fact still to be resolved. Although the current owner theoretically could prove that the former owner is a responsible party based on the circumstantial evidence provided, the former owner has rebutted that evidence with credible facts and expert opinion. And because liability under CERCLA remains unresolved, it would be premature for the court to determine the former owner's responsibility, if any, for statutory damages. Tyco Thermal Controls LLC v. Redwood Industrials, No. 5:06-cv-07164 JF, 41 ELR 20305 (N.D. Cal. Sept. 15, 2011) (Fogel, J.).

PUBLIC LAND, NEPA:

A district court held that BLM's EISs associated with the Craters of the Moon and Pinedale resource management plans (RMPs) failed to adequately analyze impacts to the sage grouse in violation of NEPA. The Craters of the Moon EIS did not discuss in any manner alternatives that reduced grazing short of a total ban even though grazing was found to be a major contributing factor to the decline of sage grouse habitat. It did discuss, but refused to analyze, a no grazing alternative. The EIS also failed to address the BLM's Special Status Species Policy and the National Sage-Grouse Habitat Conservation Strategy. Under these circumstances, the EIS's failure to consider any alternative that would have reduced grazing violates NEPA's requirement that it rigorously explore all reasonable alternatives. In addition, BLM's failure to analyze a "no grazing" alternative was arbitrary and capricious. As for the Pinedale EIS, it discussed generally how energy development and grazing would contribute to the decline of the sage grouse without identifying how or where those impacts would occur. While the EIS data showed that nearly a third of the allotment acres failed to meet rangeland health standards due to grazing, there was no discussion in the EIS of that data, or how it would "synergistically interact" with energy development to affect the sage grouse. The cumulative impacts of energy development are critical to sage grouse. Thus, the Pinedale EIS failed to conduct a proper cumulative impact analysis in violation of NEPA. Western Watersheds Project v. Salazar, No. 4:08-CV-516, 41 ELR 20306 (D. Idaho Sept. 28, 2011) (Winmill, J.).

TOXIC SUBSTANCES, TSCA:

A district court dismissed environmental groups' action against EPA seeking the regulation of lead shot and bullets under TSCA. In August 2010, the group petitioned EPA to regulate lead shot, bullets, and fishing sinkers under the Act. EPA denied the requests in two separate letters: one concerning lead shot and bullets that was sent in August, and a second letter sent in November concerning fishing sinkers. After the group received the second letter, it filed suit challenging EPA's denial of the rulemaking petition. TSCA, however, provides a 60-day time period to file a civil action. Because the groups received EPA's denial as to lead shot and bullets in August but did not challenge EPA's denial until late November, they missed the deadline. The court, therefore, lacks subject matter jurisdiction over the portion of their action related to lead shot and bullets. Center for Biological Diversity v. Jackson, No. 10-2007, 41 ELR 20307 (D.D.C. Sept. 29, 2011) (Sullivan, J.).

WATER, CALIFORNIA ENVIRONMENTAL QUALITY ACT:

A California appellate court reversed and remanded a lower court decision denying water districts' motion to amend a 1961 judgment that imposed a "physical solution" on the West Coast groundwater basin. The districts wanted to store water in underground dewatered storage spaces of the basin that were not part of the physical solution in the 1961 judgment. The lower court denied the motion to amend the judgment out of concern that certain express and implied findings in the proposed amendment might ultimately be inconsistent with any later environmental impact report (EIR) prepared under the California Environmental Quality Act. But the lower court erred in denying the motion without holding an evidentiary hearing. Under California's constitutional approach to water law, if the parties could not agree on a resolution of the issue presented in the motion to amend the judgment, the lower court had a duty to admit evidence, and if necessary, suggest a physical solution for use of dewatered acreage. The lower court also erred in requiring the districts to obtain EIRs prior to litigating a physical solution to the issue of dewatered acreage. The express language of Water Code §107534 prohibited the districts from adopting the storage plan without court approval due to the existing court order imposing a physical solution on the basin. The court therefore reversed and remanded the matter for a full hearing on a physical solution to the water storage issue. Hillside Memorial Park & Mortuary v. Golden State Water Co., No. B225058, 41 ELR 20302 (Cal. App. 2d Dist. Sept. 27, 2011).

INSURANCE, DUTY TO DEFEND:

An Illinois appellate court held that an insurer has a duty to defend a manufacturing company in an underlying lawsuit filed against it by nearby homeowners for personal injury and property damage stemming from emissions generated as part of the company's normal business operations. The insurer argued that because the emissions were intentionally discharged, they do not constitute an accident under the policy. But the alleged bodily injury and property damage were unexpected results of the company's intended emissions. They therefore constitute an accident under the policy. Similarly, the policy's expected or intended injury exclusion does not apply to preclude coverage because the company operated its plant pursuant to an emissions permit. It therefore cannot be considered to have expected or intended to injure the homeowners' persons or properties. In addition, the policy's pollution exclusion is ambiguous as to whether the emission of hazardous materials in levels authorized under a permit constitute traditional environmental pollution excluded under the policy. Because ambiguities in the complaint and policy must be resolved in favor of the insured, the insurer's duty to defend is implicated. The court, therefore, reversed a lower court decision that coverage was precluded under the policy. Erie Insurance Exchange v. Imperial Marble Corp., No. 3-10-0380, 41 ELR 20304 (Ill. App. Ct. Sept. 15, 2011).

EPA entered into two proposed settlement agreements under CERCLA that absolve the settling parties for past U.S. response costs incurred at the Granite Timber Superfund site in Granite County, Montana, due to an inability to pay; a deed record notice must be filed for a building on the site property. 76 FR 60493 (9/29/11).

EPA entered into a proposed settlement agreement under CERCLA that requires the settling party to pay $100,000 in past U.S. response costs concerning the Mine 2028 Superfund site in Brazil, Indiana. 76 FR 60493 (9/29/11).

EPA, due to new information, withdrew its proposal to exclude (or delist) from the lists of hazardous wastes landfill leachate generated by Republic Services, Inc./BFI Gulf West Landfill in Anahuac, Texas. 76 FR 59960 (9/28/11).

WILDLIFE:

FWS announced a 90-day finding on a petition to list the American eel as threatened under the ESA; the agency found that listing may be warranted and initiated a status review. 76 FR 60431 (9/29/11).

FWS announced a 12-month finding on a petition to list three southwestern moth species as endangered or threatened and to designate critical habitat under the ESA; the agency found that listing is not warranted. 76 FR 59623 (9/27/11).

FWS announced a partial 90-day finding on a petition to list 404 species in the southeastern United States as endangered or threatened under the ESA; the agency found that listing 374 of the species may be warranted and initiated a status review. 76 FR 59836 (9/27/11).

DOJ NOTICES OF SETTLEMENT:

United States v. Alice Consolidated Mines, Inc., No. 11-00446-REB (D. Idaho Sept. 22, 2011). A settling CERCLA defendant responsible for violations at the Bunker Hill Mining and Metallurgical Complex Superfund site in northern Idaho must pay $208,500 in U.S. response costs incurred at the site, must assign their interests in insurance policies to a trust, and must pay 2% of net smelter returns from any future mining activities. 76 FR 60529 (9/29/11).

United States v. TRAC Enterprises, LLC, No. 2:11-cv-00652 (S.D. W. Va. Sept. 23, 2011). A settling CERCLA defendant responsible for violations at the Custom Plating and Polishing Superfund site in Dunbar, West Virginia, must pay $72,000 in U.S. response costs incurred at the site. 76 FR 60529 (9/29/11).

United States v. J.L. French LLC, No. 2:11-CV-00860 (E.D. Wis. Sept. 12, 2011). Settling CAA defendants responsible for violations at three aluminum production facilities in Kentucky must pay an $80,000 civil penalty to the United States and Kentucky, must retest emission units, must adopt new monitoring practices, must correct deficiencies in recordkeeping and reporting, must shut down certain emission units, and must apply for new operating permits at their facilities. 76 FR 59425 (9/26/11).

H.R. 2401 (governance), which would require analyses of the cumulative and incremental impacts of certain rules and actions of EPA, was passed by the House. 157 Cong. Rec. H6419 (daily ed. Sept. 23, 2011).

Committee Action

H.R. 241 (land use) was reported by the Committee on Natural Resources. H. Rep. No. 112-216, 157 Cong. Rec. H6454 (daily ed. Sept. 23, 2011). The bill would authorize the conveyance of certain National Forest System lands in the Los Padres National Forest in California.

H.R. 473 (land use) was reported by the Committee on Natural Resources. H. Rep. No. 112-218, 157 Cong. Rec. H6454 (daily ed. Sept. 23, 2011). The bill would provide for the conveyance of approximately 140 acres of land in the Ouachita National Forest in Oklahoma to the Indian Nations Council, Inc., of the Boy Scouts of America.

H.R. 1258 (land use) was reported by the Committee on Natural Resources. H. Rep. No. 112-219, 157 Cong. Rec. H6454 (daily ed. Sept. 23, 2011). The bill would provide for the conveyance of parcels of land to Mantua, Box Elder County, Utah.

H.R. 2250 (air) was reported by the Committee on Energy and Commerce. H. Rep. No. 112-225, 157 Cong. Rec. H6460 (daily ed. Sept. 26, 2011). The bill would provide additional time for the Administrator of EPA to issue achievable standards for industrial, commercial, and institutional boilers, process heaters, and incinerators.

H.R. 2273 (solid and hazardous waste) was reported by the Committee on Energy and Commerce. H. Rep. No. 112-226, 157 Cong. Rec. H6460 (daily ed. Sept. 26, 2011). The bill would amend subtitle D of the Solid Waste Disposal Act to facilitate recovery and beneficial use of, and provide for the proper management and disposal of, materials generated by the combustion of coal and other fossil fuels.

H.R. 3061 (Pallone, D-N.J.) (wildlife) would amend the Magnuson-Stevens Fishery Conservation and Management Act to extend the authorized time period for rebuilding of certain overfished fisheries. 157 Cong. Rec. H6456 (daily ed. Sept. 23, 2011). The bill was referred to the Committee on Natural Resources.

H.R. 3063 (Sablan, D-N.M.I.) (energy) would amend the Low-Income Home Energy Assistance Act of 1981 to provide for an additional allocation of funds to the insular areas. 157 Cong. Rec. H6456 (daily ed. Sept. 23, 2011). The bill was referred to the Committee on Energy and Commerce, and in addition to the Committee on Education and the Workforce.

Note: The entries below cover state developments since the last issue of Update. The entries are arranged by state, and within each section, entries are further subdivided by subject matter area. To access material previously reported in 2011, visit our list of Cumulative State Developments. For state material reported prior to 2011, visit the ELR Archives.

The Department of Water Resources proposed to amend 15 Ariz. Admin. Code 12.15.101 and 12.15.107, pertaining to the 2012-2013 fiscal year fees. Changes would add definitions and create a new section requiring each municipality to pay the Department a fee. There will be a public hearing on October 24, 2011. Seehttp://www.azsos.gov/public_services/Register/2011/38/proposed.pdf (pp. 1846-52).

CALIFORNIA

Toxic Substances:

The Office of Environmental Health Hazard Assessment proposed amendments to 27 Cal. Code Regs. §25705, Specific Regulatory Levels Posing No Significant Risk. Changes would set the level posing no significant risk for imazalil at 11 milligrams per day. The deadline for comment is November 7, 2011. See http://www.oal.ca.gov/res/docs/pdf/notice/38z-2011.pdf (pp. 1542-44).

FLORIDA

Wildlife:

The Fish and Wildlife Conservation Commission proposed to amend 68B Fla. Admin. Code §42.007, Gear Specifications and Prohibited Gear. Changes would prohibit the use of power tools for the harvest of octocorals from state waters and adjacent federal exclusive economic zone waters. The deadline for public comment is October 14, 2011. Seehttps://www.flrules.org/Gateway/View_notice.asp?id=10428584.

MAINE

Toxic Substances:

The Department of Environmental Protection proposed to amend 06-096 Code Me. Regs. Chs. 81 & 82, Designation of Priority Toxic Chemicals and Priority Toxic Chemical Reporting and Pollution Prevention Planning. Changes would add a number of chemicals, including cadmium and formaldehyde, to the list of priority toxic chemicals, and establish details applicable to reporting and prevention requirements related to the list. There will be a public hearing October 18, 2011, and the deadline for comment is October 28. Seehttp://www.maine.gov/sos/cec/rules/notices/2011/092811.html.

The Department of Environmental Conservation proposed to amend N.Y. Comp. Codes R. & Regs. tit. 6, §§52, 190, 550-555, 560, and 750, High Volume Hydraulic Fracturing. Changes will promulgate new regulations related to the use of high-volume hydraulic fracturing and update the oil and gas and state pollutant discharge elimination system regulations. There will be public hearings November 16-30, 2011, and the deadline for public comment is December 12. Seehttp://www.dos.ny.gov/info/register/2011/sep28/pdfs/rules.pdf (pp. 11-17).

The Department of Environmental Management proposed to revise Administrative Rules of Practice and Procedure for the Administrative Adjudication Division for Environmental Matters. Rule changes pertain to recent changes to state law that stipulate that the decisions of administrative hearing officers become final agency decisions rather than recommendations for the department director's review. In addition, changes would update rules on electric filings. There will be a public hearing October 27, 2011, and the deadline for written comment is October 26. See http://sos.ri.gov/documents/archives/regdocs/holding/DEM/apadraft.pdf.

An official panel said last week that climate change will cause damage to Canada equivalent to about 1% of gross domestic product (GDP) in 2050 due to flooding, illness, and the death of forests. In addition, the damage could amount to as much as 2.5% of GDP by 2075. The National Round Table on the Environment and the Economy, set up in 1988 to provide advice on environmental issues, said that the northern regions of Canada are warming at a rate much faster than the rest of the earth, and that the Conservative government should do more to mitigate its effects--effects that may include rising health care costs, major flooding of the Vancouver area, and pests and fires damaging forests. The panel recommended better measures to protect against forest fires, pollution control to limit ozone formation, and new construction prohibited in areas at risk of flooding. The panel also dismissed the idea that climate change may help northern countries by reducing heating costs. "Our houses are well insulated," the panel said. "Prairie farmers are accustomed to variability in moisture levels from one growing season to the next, but recent research suggests the potential for more severe and frequent drought and unusually wet years, with implications for future yields." For the full story, see http://www.bbc.co.uk/news/world-us-canada-15119210. For the story on flood risks in Vancouver, see http://www.vancouversun.com/news/Vancouver+faces+greatest+flood+risk/5482186/story.html.

JUDGE HALTS BELO MONTE DAM CONSTRUCTION

A Brazilian judge halted work on the multi-billion dollar Belo Monte dam, ruling in favor of fisheries groups who argued that the dam posed a threat to the livelihoods of indigenous communities on the Xingu river. The government has said that the dam, which would be the world's third largest, is necessary to meet Brazil's growing energy needs and will provide electricity to 23 million homes. But Judge Carlos Castro Martins barred Norte Energia, the company behind the project, from building infrastructure that would interfere with the flow of the river and affect fish stocks. The injunction is the latest development in a decades-long battle against the Belo Monte dam. Last March, a federal judge had ordered construction stopped until precautions to avoid reduced water level were met. One week later, a higher court lifted the ban, saying that construction could continue without all precautions being met, in spite of protest from indigenous groups who said that up to 50,000 indigenous people will lose their livelihoods. For the full story, see http://www.bbc.co.uk/news/world-latin-america-15102520 and http://www.guardian.co.uk/environment/2011/sep/29/brazilian-judge-monte-bello-dam. For a previous update on this story, see http://www.elr.info/International/update/3.7.11.internationalupdate.cfm.

AVIATION GROUP PROTESTS EU EMISSIONS TRADING SCHEME LAWS

The International Civil Aviation Organization (ICAO) Council and other non-EU member states agreed to launch a formal protest against the EU last week over its plans to charge for carbon emissions from airlines, a move ICAO and other countries called discriminatory and inconsistent with global laws. Starting in January, airlines will have to buy permits from the Emissions Trading Scheme for 15% of carbon emissions produced during flights to and from Europe. The non-EU ICAO members opposed the "unilateral" imposition of the Emissions Trading Scheme, and asked the EU to work with the rest of the world to reduce emissions from aviation. The countries expressed concern that the rules may violate the Chicago Convention on international aviation and also World Trade Organization rules. So far, 26 countries, including China, Russia, and the United States, have opposed the plan, and carriers such as American Airlines, Continental Airlines, and Middle Eastern Airlines have joined opposition to the EU plan. For the full story, see http://www.businessweek.com/news/2011-09-29/india-rallies-30-nations-against-eu-airline-emission-levy.html.